Correlation Between Embrace Change and Allied Energy
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Allied Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Embrace Change and Allied Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and Allied Energy, you can compare the effects of market volatilities on Embrace Change and Allied Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Embrace Change with a short position of Allied Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Allied Energy.
Diversification Opportunities for Embrace Change and Allied Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embrace and Allied is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Allied Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Energy and Embrace Change is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Embrace Change Acquisition are associated (or correlated) with Allied Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Energy has no effect on the direction of Embrace Change i.e., Embrace Change and Allied Energy go up and down completely randomly.
Pair Corralation between Embrace Change and Allied Energy
Given the investment horizon of 90 days Embrace Change is expected to generate 61.26 times less return on investment than Allied Energy. But when comparing it to its historical volatility, Embrace Change Acquisition is 65.1 times less risky than Allied Energy. It trades about 0.12 of its potential returns per unit of risk. Allied Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Allied Energy on August 29, 2024 and sell it today you would earn a total of 0.19 from holding Allied Energy or generate 17.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Allied Energy
Performance |
| Timeline |
| Embrace Change Acqui |
| Allied Energy |
Embrace Change and Allied Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Allied Energy
The main advantage of trading using opposite Embrace Change and Allied Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Allied Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allied Energy will offset losses from the drop in Allied Energy's long position.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
| Allied Energy vs. Green Planet Bio | Allied Energy vs. Azure Holding Group | Allied Energy vs. Four Leaf Acquisition | Allied Energy vs. Opus Magnum Ameris |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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